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<SEC-DOCUMENT>0001193125-10-196485.txt : 20110211
<SEC-HEADER>0001193125-10-196485.hdr.sgml : 20110211
<ACCEPTANCE-DATETIME>20100825115355
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-10-196485
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20100825

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			IMPERIAL OIL LTD
		CENTRAL INDEX KEY:			0000049938
		STANDARD INDUSTRIAL CLASSIFICATION:	PETROLEUM REFINING [2911]
		IRS NUMBER:				980017682
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		237 FOURTH AVENUE S.W.
		CITY:			CALGARY
		STATE:			A0
		ZIP:			T2P 3M9
		BUSINESS PHONE:		1-800-567-3776

	MAIL ADDRESS:	
		STREET 1:		237 FOURTH AVENUE S.W.
		CITY:			CALGARY
		STATE:			A0
		ZIP:			T2P 3M9
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML><HEAD>
<TITLE>SEC Correspondence</TITLE>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2"><B>Imperial Oil Limited</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">237 Fourth Avenue SW
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">P.O. Box 2480, Station M</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2">Calgary, AB, Canada T2P 3M9
</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">Paul J. Masschelin</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">Senior
Vice-President</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">Finance and Administration</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2">and Treasurer
</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="2">Tel. (403) 237-4304</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:ARIAL" SIZE="2">Fax (403)
237-2060</FONT></P></TD></TR></TABLE> <P STYLE="margin-top:24px;margin-bottom:0px; margin-left:71%; text-indent:-2%"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">August&nbsp;25, 2010
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">Mr.&nbsp;H. Roger Schwall </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">Assistant Director </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">U.S. Securities and Exchange Commission </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">Division of Corporation Finance </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">100 F Street, N.E., Stop 7010 </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">Washington, D.C. 20549 </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">Re:</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="3">Imperial Oil Limited <BR>Form 10-K for the Fiscal Year ended December&nbsp;31, 2009 <BR>Filed February&nbsp;26, 2010 <BR>Response Letter dated May&nbsp;21, 2010
<BR>File No. 0-12014 </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">Dear Mr.&nbsp;Schwall: </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">On behalf of Imperial Oil Limited, please find enclosed our responses to your comments
regarding the above filing set forth in your letter of July&nbsp;16, 2010. We appreciate your agreement to extending the timing of our responses pursuant to the July&nbsp;19, 2010 letter from Mr.&nbsp;Sean Carleton to Mr.&nbsp;John Lucas. Our
responses are numbered to correspond to the numbered comments in your letter. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">If
you desire clarification of our responses, please direct any questions to Mr.&nbsp;Sean Carleton, Controller, at 403-237-3825. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; margin-left:71%; text-indent:-2%"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">Yours truly, </FONT></P>
<P STYLE="margin-top:36px;margin-bottom:0px; margin-left:71%; text-indent:-2%"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">/s/ P.J. Masschelin </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="3">Attachment </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="3"><B><I><FONT STYLE="font-family:ARIAL" SIZE="3">Imperial Oil Limited&#146;s Response to the
</FONT></I></B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:ARIAL" SIZE="3"><B><I><FONT STYLE="font-family:ARIAL" SIZE="3">Comments Included in the SEC Letter of July&nbsp;16, 2010 </FONT></I></B>
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3"><U>Form 10-K for the fiscal year ended December&nbsp;31, 2009 </U></FONT></I></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3"><U>Business, page 3 </U></FONT></I></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3"><U>Upstream, page 4 </U></FONT></I></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3"><U>Preparation of Reserves Estimates, page 5 </U></FONT></I></FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3">1.</FONT></I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3">Based on your responses to certain comments in our letter dated April&nbsp;21, 2010, we understand that you use the phrase
&#147;proved reserves&#148;, under this heading and elsewhere in your filing, to refer to reserve estimates that do not meet the definition of proved reserves provided in SEC rules and US GAAP. Rather, these reserve estimates represent estimates
used for your internal planning purposes and capital investments decisions and are based on your internal price assumptions. Revise your disclosure to use of the phrase &#147;proved reserves&#148; to refer only to quantities determined in accordance
with SEC rules and US GAAP. When referring to other quantities, use &#147;estimates used for internal planning and capital investment decisions&#148; or similarly descriptive language. </FONT></I></FONT></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">Beginning in our 2010 Form 10-K, we will revise our disclosure to use the phrase &#147;proved
reserves&#148; to refer only to quantities determined in accordance with SEC rules and US GAAP. When referring to other quantities, we will use the phrase &#147;estimates used for internal planning and capital investment decisions&#148; or similarly
descriptive language to clearly distinguish their difference from proved reserves. </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3"><U>Directors, Executive
Officers, and Corporate Governance, page 25 </U></FONT></I></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3">2.</FONT></I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3">We note your responses to prior comments 3 and 4 from our letter to you dated April&nbsp;21, 2010. Insofar as Form 10-K requires the
Item&nbsp;401 disclosure to be included or incorporated by reference, please provide all the disclosure which Item&nbsp;10 of Form 10-K requires, if you amend the 2009 Form 10-K for any reason. Otherwise, ensure that the 2010 Form 10-K includes all
required disclosure. </FONT></I></FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">We will provide all disclosure required
under Item&nbsp;401 of Regulation S-K in our 2010 Form 10-K. </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3"><U>Financial Statements, page 78
</U></FONT></I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3"><U>Notes to Consolidated Financial Statements, page 83 </U></FONT></I></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3"><U>Note 1 &#150; Summary of Significant Accounting Policies, page 83 </U></FONT></I></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3"><U>Property, plant and equipment, page 84 </U></FONT></I></FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT></I><FONT STYLE="font-family:ARIAL" SIZE="3">3.<I></I></FONT></FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="3"><FONT STYLE="font-family:ARIAL" SIZE="3"><I>Your response to prior comment number seven from our letter dated April&nbsp;21, 2010, as well as disclosure in your
filing, indicates that &#147;commitment by management to proceed with the </I></FONT></FONT></P></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">Page 1 of 4&nbsp;&nbsp;&nbsp;&nbsp; </FONT></P>


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<TD ALIGN="left" VALIGN="top"> <P><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3">
development project&#148; is required before proved reserves are permitted to be recorded. Clarify for us whether authorization for management to proceed with the development project is also
required before proved reserves are permitted to be recorded. If authorization is required, explain to us the significance of the approval of your board of directors for the first phase of Kearl oil sands project, as described in your May&nbsp;25,
2009 press release, and why recording of proved reserves associated with the project was appropriate prior to that approval. If authorization is not required, please explain to us why it is appropriate to record proved reserves prior to the time
management has been authorized to proceed with the development project. </FONT></I></FONT></P></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">As indicated in our response to your prior comment number seven, Imperial Oil has a well
established and structured capital investment endorsement and approval process for all of its projects, including oil sands mining projects and other oil and gas projects. The process includes provisions authorizing management to make decisions to
proceed with the development of projects. Funding commitments and approvals to proceed usually occur in the same decision event. If the project is large and complex such as the Kearl project, there may be several management funding commitment
milestones where early expenditures are required (e.g. detailed engineering design, long-lead time equipment needs, pipelines, etc.) in advance of the booking of proved reserves and the final approval of the total project. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">A number of areas are considered by management in determining whether to approve capital funds and
commit to project development. Among these considerations are the maturity of the development concept and execution plan, the degree of certainty regarding the reserves assessment, alignment with our co-venturer and governments regarding the bases
on which the project will proceed, the degree of confidence in market access for the hydrocarbons, and the adequacy of projected future economic benefits versus corporate objectives. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">The company&#146;s board of directors approved the year-end 2008 reporting of proved reserves,
which included reserves for the first phase of the Kearl project, based on the substantial funding commitment to the project through the end of 2008. The board understood that negotiations were actively underway with several engineering, procurement
and construction contractors and suppliers for the project, the completion of which would serve to finalize the project cost estimate by the second quarter of 2009. Following conclusion of the key negotiations, the board formally approved the final
estimate of expenditures for the first phase of the Kearl project and the May&nbsp;25, 2009 press release was issued. </FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT></I><FONT STYLE="font-family:ARIAL" SIZE="3">4.<I></I></FONT></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="3"><FONT STYLE="font-family:ARIAL" SIZE="3"><I>Based on your response to our prior comment seven, we understand that you have capitalized oil sands mining expenditures prior to
booking proved reserves. If our understanding is not correct, please clarify this for us. Otherwise, please tell us your accounting basis for doing so. Include reference to the applicable literature that supports your accounting. As part of your
response, tell us the amounts and specific nature of such capitalized costs as of December&nbsp;31, 2008,&nbsp;December&nbsp;31, 2009 and each interim period in 2010. </I></FONT></FONT></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">Your understanding is correct that there were capitalized oil sands mining expenditures prior to
booking proved reserves. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">There are certain activities conducted during the initial
assessment of the development of a potential resource. These activities include evaluation of various design concepts and </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;
</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">Page 2 of 4&nbsp;&nbsp;&nbsp;&nbsp; </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">
economic feasibility studies, the costs of which are expensed as incurred as there is no future economic benefit to be directly derived from these activities. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">Following selection of a design concept, there are activities that may be capitalized prior to the
booking of proved reserves. These activities generally involve front-end engineering design, infrastructure activities and the acquisition of long lead time equipment. Consistent with the definition of an asset included in Financial Accounting
Standards Board&#146;s Statement of Financial Accounting Concepts No.&nbsp;6 paragraph 25 (FASB CON 6-25), future economic benefits are probable as they represent the early stages of the building of a group of integrated assets that are expected to
receive appropriate funding approval. If approval is not received to progress a project, then any capitalized costs would be written off to expense at that time. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">There is no specific guidance regarding the capitalization of mining activities in the Accounting
Standard Codification. However, ASC 932-360-25-3 (Extractive Activities - Oil and Gas) does state that &#147;certain types of costs may be capitalized as construction in progress pending further information about the existence of future
benefits&#148;. Similarly, in paragraph 10 of the same section, it states that exploratory well costs &#147;shall be capitalized pending determination of whether the well has found proved reserves&#148;. These statements are consistent with the
basic asset concept described in CON 6. Costs associated with a project that has clearly defined and reasonably expected future benefits should be recorded as an asset and should remain as such unless it is determined that the future benefits are
not likely. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">Proved reserves for the Kearl project were booked for year-end 2008 and by
that time, CAD 0.4 billion related to the Kearl project expenditures were capitalized. A majority of the capitalized expenditures were spent on front end engineering to define the project design and execution plan. Most of the remaining expenditures
were spent on the initiation of access road construction, site preparation and earthworks. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">As of December&nbsp;31, 2009, and in the first and second quarter of 2010, oil sands mining
expenditures capitalized prior to booking proved reserves were de minimis. </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3"><U>Asset retirement obligations
and other environmental liabilities, page 85 </U></FONT></I></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:ARIAL" SIZE="3"><B><FONT STYLE="font-family:ARIAL" SIZE="3">The response to comments No.&nbsp;5 and 6 is
shown after comment No.&nbsp;6 </FONT></B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3">5.</FONT></I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3">We note from your response to prior comment eight from our letter dated April&nbsp;21, 2010 that the facilities for which asset
retirement obligations have not been established are primarily refineries, primary distribution terminals, company-owned or leased retail service stations and chemical plants and for which the useful lives are indeterminate due to plans for
continued operation of these facilities. We also note that you disclose depreciation of your plant and equipment is calculated using the straight-line method based on the estimated useful service life of the assets. Please tell us how you determined
the service life for determining depreciation expense is consistent with your assertion that, in regards to establishing a liability for asset retirement obligations related to asset disposals, the life of the facilities is indefinite. </FONT></I>
</FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3">6.</FONT></I></FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3">Regarding the facilities referenced in your response to our prior comment eight, please also tell us how you
determined your unit of account for measuring these assets and related </FONT></I></FONT></P></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3">
retirement obligations and how you considered component parts of a larger system and partial retirements. Refer to FASB ASC 410-20-55-9 and 55-10. </FONT></I></FONT></P></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">All of Imperial Oil&#146;s currently operated manufacturing, distribution and marketing sites are
designated for industrial use. Asset retirement obligations for these sites arise following cessation of operations and dismantlement of plant and equipment. Individual units within a refinery, distribution terminal, service station or chemical
plant have determinable useful lives, but there are no legal obligations associated with the partial or complete replacement of such units. Ongoing maintenance and capital programs result in the site as a whole having an indeterminate life. For
example, disciplined maintenance and paced capital investments have enabled the company&#146;s Sarnia, Dartmouth, Strathcona and Nanticoke refineries, the four refineries that the company currently operates in Canada, to be in continuous operation
since 1897, 1918, 1976 and 1978, respectively. </FONT></P> <P STYLE="font-size:24px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3">7.</FONT></I></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:ARIAL" SIZE="3"><I><FONT STYLE="font-family:ARIAL" SIZE="3">Your response to prior comment eight states that your asset retirement obligations for the facilities in question generally become
firm at the time the facilities are permanently shut down and dismantled. Please tell us why you are unable to make a reasonable estimate of the fair value of your asset retirement obligations at a point in time prior to the permanent shut-down and
dismantlement of those facilities. As a part of your response, explain your basis for concluding that there is not a period prior to actual shut-down or dismantlement where sufficient information exists to estimate a range of potential settlement
dates. As previously requested, please describe the process and time period through which the shut down and dismantlement of the assets in question is planned, approved and executed. </FONT></I></FONT></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">As indicated in our response to your comments number five and six above, the facilities in question
have indeterminate lives based on plans for continued operations, and as such, the fair value of the conditional legal obligations for asset retirements cannot be measured. Asset retirement obligations for these facilities will be recognized when
sufficient information exists to reasonably estimate the timing of the potential settlement dates. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">As indicated in our response to your prior comment number eight, the company has an active asset
management program, which includes a disciplined, regular review to ensure all assets are contributing to the company&#146;s strategic objectives. Assets that are no longer strategic or productive or which cannot be improved to meet corporate
objectives are considered for divestment or shut down. In the last five years there was no shut down of any significant sites in the downstream and chemical segments for which the establishment of an asset retirement obligation was required.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:ARIAL" SIZE="3"></FONT><FONT STYLE="font-family:ARIAL" SIZE="3">Page 4 of 4&nbsp;&nbsp;&nbsp;&nbsp; </FONT></P>

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